Cargo Services Q&A: West Coast longshore negotiations

West Coast longshore negotiations impacting nearly 20,000 dockworkers at 29 West Coast ports began on May 12, 2014. The Pacific Maritime Association (PMA) and the International Longshore and Warehouse Union (ILWU) remain at the table working to reach agreement on a new coast-wide contract. The current six-year contract expires on June 30, 2014.

Freight forwarders, including Cargo Services, are closely monitoring the negotiations. The following Q&A provides history, background and potential implications of this labor relations situation.

Why is there concern about possible disruption at U.S. West Coast ports?

Any negotiations for new longshore labor agreements bring a risk of disruption at ports. The disruption can be a work stoppage or slowdown. Past history between the Pacific Maritime Association (PMA) and International Longshore and Warehouse Union indicates there will be some type of disruption. The 2002 negotiations had a 10-day lockout of ILWU workers by employers (represented by the PMA).

When is the risk of disruption the greatest?

The greatest risk comes at the end of the current contract, June 30, 2014. ILWU is bound by a clause in its current contract barring strikes during the life of the contract; however, work slowdowns do happen. After June 30 parties may decide to extend the agreement into July, and can continue to extend the contract while negotiations take place. Disruptions can still take place if this happens.

Is disruption a certainty?

It is likely there will be some disruption. The National Industrial Transportation League told its members not to expect a strike or lockout, but to anticipate picketing and slowdowns. In the 2002, 10-day lockout then-President Bush forced ports to re-open using the Taft-Hartley Injunction.

What ports do the negotiations cover?

The union workers are located at 29 U.S. West Coast ports, including major ports such as Los Angeles, Long Beach, Oakland, Portland, Seattle and Tacoma.

Are shippers diverting or accelerating cargo shipments to avoid the U.S. West Coast?

Shippers are diverting shipments to Canadian ports (Vancouver and Prince Rupert) and U.S. East Coast ports. Shippers also are accelerating shipments importing extra inventory in case of a work stoppage causing major congestion during peak shipping season. Vessels are reporting near capacity to Canada and U.S. East Coast ports. Two-thirds of the 221 shippers that responded to a May 12 to14 Journal of Commerce survey said they have plans to divert:

73 percent said they will ship through East or Gulf Coast ports,

25 percent said they will ship through Canadian ports, and

2 percent will ship through Mexico.

What is the expected duration of the new West Coast longshore contract?

Either a three- or six-year contract is expected. Shippers, carriers and other industry groups want a six-year contract. The union is seeking a three-year contract. One major issue is the Obama Care “Cadillac” tax penalty faced by the union’s medical insurance, which pays 100 percent of the premiums for health and dental, plus union members pay $1co-pay for medications. The tax is estimated at $150 million per year. It’s speculated that since the tax takes effect in 2018, the union may want to consider the discussion point in 2017 by securing a three-year contract.

What are other potential flashpoints?

Jurisdiction: The spread of technology and automation threatens ILWU jurisdiction because maintaining the sophisticated cargo-handling equipment requires specialized skills that the mechanics and electricians unions encourage by putting their members through rigorous educational and apprenticeship programs. Last year the ILWU withdrew from the AFL-CIO complaining that the umbrella labor organization was not supporting it in jurisdictional disputes with other unions.

How much do West Coast longshoremen earn?

Full time workers earn an average of $142,000 yearly in wages, along with a non-wage benefits package costing more than $82,000 per active worker per year.

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